Uniswap
Basics * A DEX * Uniswap is a protocol for automated token exchange on Ethereum. From the website: # A simple smart contract interface for swapping ERC20 tokens. '' # ''A formalized model for pooling liquidity reserves # An open source frontend interface for traders and liquidity providers # A commitment to free and decentralized asset exchange * From the Token Economy newsletter (7-2019): "Uniswap uses pooled liquidity reserves and a constant product market-making formula. In less abstract terms that means that liquidity providers can add tokens to pools and others can then trade directly against those pools with the smart contract as their counterparty. Liquidity providers earn fees from trades done against the liquidity pool they supplied to. The benefit of this model is that it’s very easy to use as neither liquidity providers nor traders need to find a counterparty to use the system. The downside is that traders sometimes experience significant slippage and that being a liquidity provider is not always as profitable as one might hope." Tech * From Token Tuesdays (5-11-2019): "Uniswap has permissionless liquidity reserves that are 100% on-chain. There are no dependencies outside of the Ethereum network for the protocol to operate. This ultimately allows for anyone with an internet connection to trade any ERC20 token, and more importantly, for anyone to integrate Uniswap functionality directly into their web3 product. Liquidity providers deposit 50% of the value in ETH and the other 50% of the value in the ERC20 token into the token pool. In doing so, liquidity providers receive a tokenized share of their pool which entitles them to a pro-rate percentage of the 0.3% trading fees that are generated when the trading pair is used. Providers can liquidate their shares at any time using this link. While this doesn’t seem very significant, the returns can add up over time if there’s sufficient trading on any given pool. As it stands today, liquidity providers can earn over 14% in annualized returns on the ETH/DAI trading pair. This is fairly significant as it outpaces DeFi lending platforms, like Compound, with lending rates of 4.24% APY on Dai." Staking * From Token Tuesdays (17-12-2019): "Anyone can lock collateral into a specific Uniswap Pool and earn a portion of the 0.3% liquidity fee incurred on all exchange transactions. For those unfamiliar with this process, suppliers *lock* collateral in return for a liquidity token which can be redeemed at any time." Pro's and Con's Pro's * Never give up ownership of your funds * No KYC/AML * Users don’t have to worry about deposit or withdrawal minimums and lockups as well as pay significantly less on trading fees. * "Uniswap has (23-1-2020) solid defensibility as it has moneyful state in it. The more liquidity in the protocol, the more liquidity it attracts." Con's * Only available for Ethereum-based assets * Stiff competition (Ren, Kyber, 0x and IDEX) * "Uniswap for better or worse (23-1-2020), has no premine and no transaction fee cuts. Good for users, not so good for investors. Eventually when VC pressure kicks in, the team will need to add fees in v2 or v3 in the further out future. However the biggest threat to Uniswap will be the non rent seeking behavior of v1. Just like 0x v2 is a non rent seeking protocol (or a poorly attempted rent seeking protocol), 0x v3's biggest problem is its predecessor. If you think about it, the best time to launch and fund a new Uniswap competitor will be during the launch of a new version. I'd imagine that v2 could offer enough improvements that migrate liquidity over, however if v2 is similar to v1 (in terms of monetisation) then v3 is going to be harder to push as majority of improvements will be taken care of in v2. Country Banning * From DeFi Weekly #53 (12-12-2019): "Uniswap low-key bans a bunch of countries that the US has shaky relations with. However, there wasn't an official announcement - just a silent code push with no comments from Hayden or anyone else on the project. What is interesting is the fact that someone happened to re-host the front-end on IPFS without the restrictions. It's great to see the permissionless nature of these technologies take place although I think it's a key event to take note of." Usage * From the Token Economy newsletter: "Uniswap’s weekly volumes have been (7-2019) over $6 million for 3 consecutive months now. This could be indicating that there are not occasional whale acts that drive the metrics, but rather persistent user problems being solved and a snowball effect at play with better liquidity, lower slippage, more demand and so on." * From their year recap (1-1-2020): "All Time Volume: $0.8M -> $390M Liquidity Provider Fees Accrued $2400 -> $1.2Mx Exchanges Deployed: 110 -> 1605 Pools with >$50k: 2 -> 28 Largest Pool: $100k (SAI/ETH) -> $10M (sETH/ETH)" * From (31-12-2019) an 0x 2019 recap: "Uniswap took the Ethereum community by storm, garnering significant mindshare, and driving a new narrative around dApp UX and composability. In less than a year, Uniswap captured 25% of DEX market share by $-volume." Other projects * From Proof of Work #75 (28-9-2019): "At ETH Boston, UniSwap created a project for Decentralized Restaurant Reviews with the FOAM Map and 3Box Chat threads. Code is here." ETH Grant Web Interface * From the EthHub Weekly #84 (21-10-2019): "The UniswapDEX.com site is a new web interface to the Uniswap contracts that were developed as part of an Ethereum Foundation grant. Using this interface you can instantly convert between Ethereum and any other ERC-20 token. You can also become a liquidity provider and earn about 3% APR for the ERC20 tokens you are not using. Many more features are also included so check out the announcement post here." Team, Investors, partnerships, etc. * Had a grant (8-2018) from the Ethereum Foundation of 100k. It build a new web interface with it (10-2019). * Got a grants the first two rounds of Gitcoin Grants * Part of the WBTC community Category:Companies/Organisations Category:Exchange